Good News: Treasury, Fed Both Rule Out Trillion Dollar Coin

The fact that high-level government officials even needed to address this issue at all should tell you how high over the shark American politics has jumped. But the Department of Treasury today did indeed comment on the "trillion dollar platinum coin" lunacy, and rejected the idea that the White House had seriously considered such a "solution" to the debt crisis. Ezra Klein at WaPo reports:

That’s the bottom line of the statement that Anthony Coley, a spokesman for the Treasury Department, gave me today. “Neither the Treasury Department nor the Federal Reserve believes that the law can or should be used to facilitate the production of platinum coins for the purpose of avoiding an increase in the debt limit,” he said.

The inclusion of the Federal Reserve is significant. For the platinum coin idea to work, the Federal Reserve would have to treat it as a legal way for the Treasury Department to create currency. If they don’t believe it’s legal and would not credit the Treasury Department’s deposit, the platinum coin would be worthless.

So the government won't try to cheat its way out of actually fixing the debt crisis by minting the coin; in a sense, this is great news, since such a move would be financially irresponsible and politically disastrous. But again, the fact that it was ever a real policy recommendation speaks to our current level of dysfunction.

Of course, as Guy reported, Harry Reid has given President Obama his approval to unilaterally raise the debt ceiling without congressional involvement. It's unclear whether Obama will actually take him up on this offer, but still, any celebrations over the prevailing of common sense are far, far too premature.